In an update to a case over alleged fraud involving the firm Biozoom that we reported on last year, the SEC last month charged 4 individuals with generating over $34 million in illicit profit by engaging in a series of fraudulent schemes to boost the price of Biozoom, which was subsequently sold off in an allegedly illegal sale.
Though there are many ins and outs to this case, if true, it's a fairly egregious example of fraud that doesn't happen every day. According to the SEC, not only did the defendants allegedly hide their ownership of Biozoom (and the subsequent sales thereof), but they allegedly did so through an impressive range of techniques, utilizing, among other things, offshore bank accounts, fake legal documents, and a network of nominees.
Though the investigation is ongoing, if true, this represents a large-scale conspiracy to defraud investors, as not only were the above sophisticated techniques employed, but the defendants allegedly doubled-down on their activities by investing in a significantly wide advertising campaign designed to artificially boost the price of Biozoom far beyond the point it had already reached through the above activities.
Cases Like This Underscore the Need for Compliance
Though the burden of maintaining compliance can be onerous, the reality is that we live in a new regulatory era, an era of intense scrutiny and transparency that is unlikely to change or let up any time soon.
In such an environment, even small violations can be dealt with severely. The case above is obviously different and represents the extreme of the spectrum, but even small violations of regulations can lead to enforcement for firms that aren't paying close attention to compliance.
Additionally, regulators have tools at their disposal that they've never had before this modern era of technology and oversight, allowing them to analyze larger amounts of data in short timeframes to identify outliers and potential violators. There's just not a lot of room for error these days. While overt fraudulent activity, like the alleged crimes involving Biozoom, are rare, it's critical that compliance is attended to rigorously to avoid potential issues.
If You're Getting Calls From Regulators, We're Here to Help
The SEC and other regulatory bodies can suddenly become very real and intimidating when they start calling your office, but we deal with them every day. Contact us to learn more about how we provide regulatory counsel to firms of all shapes and sizes to help them navigate examinations, formal investigations, and enforcement with our Quick Response Team.
Add a comment
- Top 3 Considerations During the Breakaway & Transition Process
- Succession Planning: Identifying a Successor
- California AG Submits Final CCPA Rules for Approval
- ICO To Return $25 Million to Investors
- SEC Charges Morgan Stanley Smith Barney with Providing Misleading Information to Retail Clients
- FINRA’s Senior Help Line: Celebrating 5 Years of Providing Protection
- How To Start: Are You Evaluating Your Firm’s Whistleblower Policies?
- Three Firms’ Failure to Disclose Conflicts of Interest Lead to Almost $1 Million in Disgorgement, Interest
- OCIE Risk Alert—Examinations Focused on Initial Compliance With Regulation Best Interest
- Lone Star Value Management Firm and Founder Pay to Settle SEC Disclosure Charges
- Securities and Exchange Commission (SEC)
- Investment Advisers
- Aging Clients
- Due Diligence
- Transition Services
- Policies and Procedures
- Broker Protocol
- Virtual Currency
- California Consumer Privacy Act (CCPA)
- Dodd-Frank Act
- Advisers Act
- Securities Law
- Office of Compliance Inspections and Examinations (OCIE)
- Ponzi Scheme
- Form U5
- Private Equity
- Private Funds
- Regulation Best Interest
- Hedge Funds
- Regulatory Examinations
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Social Media Marketing
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Wells Fargo